Economics at your fingertips  

Distributional Consequences of Fiscal Adjustments: What Do the Data Say?

Jaejoon Woo (), Elva Bova, Tidiane Kinda () and Y. Sophia Zhang ()
Additional contact information
Y. Sophia Zhang: Bank of America Merrill Lynch

IMF Economic Review, 2017, vol. 65, issue 2, No 3, 273-307

Abstract: Abstract The 2007–2009 Great Recession has led to an unprecedented increase in public debt in many countries, triggering substantial fiscal adjustments. What are the distributional consequences of fiscal austerity measures? This is an important policy question. This paper analyzes the effects of fiscal adjustments for a panel of 17 OECD countries over the last 30 years, complemented by a case study of selected fiscal adjustment episodes. The paper shows that fiscal adjustments are likely to raise inequality through various channels including their effects on unemployment. Spending-based adjustments tend to worsen inequality more significantly, relative to tax-based adjustments. The composition of austerity measures also matters: progressive taxation and targeted social benefits and subsidies introduced in the context of a broader decline in spending can help offset some of the adverse distributional impact of fiscal adjustments.

Keywords: D3; D63; I38 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

DOI: 10.1057/s41308-016-0021-1

Access Statistics for this article

More articles in IMF Economic Review from Palgrave Macmillan, International Monetary Fund
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2022-08-30
Handle: RePEc:pal:imfecr:v:65:y:2017:i:2:d:10.1057_s41308-016-0021-1